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The Bike-Share Wars Heat Up With Latest Funding

February 16, 2018

The bike-sharing wars have escalated. What started as healthy competition between two powerful, well-funded Chinese companies and a handful of scrappy American upstarts has intensified into a trash-talking land grab involving electric scooters, electric bikes, and plenty of Silicon Valley-style ambition.

In October, LimeBike the favored competitor of Silicon Valley venture firms Andreessen Horowitz and Coatue Management, raised $50 million in funding. At the time it was in 20 markets around the country, with aggressive plans to expand into 20 more. (The dockless model allows customers to unlock a bike and pay as little as $1 to rent it with their smartphone, leaving it wherever they want when they’re done.) But with Chinese competitors Ofo and Mobike circling, Uber dabbling in electric bikes, and new competitors ranging from auto companies to startups emerging weekly, LimeBike executives believed their plan to double its number of markets wasn’t enough. On Monday, LimeBike deployed its first fleet of electric bikes in Seattle and announced it would soon offer scooter sharing as well.

CEO Toby Sun says LimeBike, now in 46 markets including two European cities, needs to grow even faster than planned. That’s why the company has raised another $70 million as an extension to the October round, bringing its total backing to $132 million. LimeBike would not comment on its new valuation. In October, investors valued the company at $225 million.

Sun says the company’s fast pace of growth is merely meeting demand from users and cities. The company has also seen demand from landlords. A number of commercial and residential real estate owners have become interested in bike sharing as a way to make their properties more valuable, says Brad Greiwe, a managing partner at Fifth Wall Ventures, which focuses on real estate. His firm led LimeBike’s latest fundraising. Greiwe says property owners are eager to adopt dockless bike sharing because it can expand accessibility to buildings, especially ones that aren’t within walking distance to public transit. Further, tenants increasingly expect bike sharing as an amenity, he says, and landlords want to partner to provide hubs and storage areas for bikes.

Competition plays a big role in the company’s hard-charging growth. In recent months Mobike and Ofo, the two dominant Chinese players, have embarked on aggressive expansion in the US. Chinese startups were first to introduce dockless bike sharing, and they have a head start in terms of footprint, brand recognition, and funding raised. Mobike and Ofo are in hundreds of cities around the world and have raised around $1 billion each in venture funding, valuing them in the billions. Their global expansion and insatiable appetite for growth has snapped US cities, many of which operated slow-to-adapt and expensive docked systems, out of a lull. In November Mobike CTO Joe Xia explained his company’s ethos to WIRED in a language familiar to many in Silicon Valley: “Anything we do we want to totally just disrupt.”

Stateside, LimeBike’s competition includes Spin, Motivate, and a variety of regional upstarts. A former Uber and Lyft executive recently launched Bird, an electric-scooter startup. Ford has backed a San Francisco-based bike-sharing program called GoBike, which recently announced it will add electric bikes. And Uber recently announced a bike service called Uber Bike in partnership with New York startup Jump Bikes.

Dockless bike share has quickly spread around the world because companies technically don’t have to wait for a city’s approval to launch. They can just scatter some bikes around the city and encourage people to start riding. But LimeBike is proceeding with more caution, working in tandem with governments and regulators to avoid having their bikes confiscated and to educate riders on where to properly park them. The parking issue is acute—“bike litter” has already invited complaints and regulatory scrutiny in a number of cities.

LimeBike is open to partnering with a ride-sharing company “or other mobility platform,” Sun says, but he would not comment on any ongoing discussions.

The company has been outspoken about its competition. Caen Contee1, head of marketing and partnerships for LimeBike, complained that Ofo is giving rides away for free in Seattle, saying it has hurt LimeBike’s ability to compete. “When a player is doing free rides month after month … it just feels unfair when a company raised a ton of capital and is trying to capitalize that by providing free rides,” he says.

Like most hot categories flooded with new entrants, bike sharing will eventually consolidate. Contee says he’s already seen some smaller startups with less funding narrow their focus to college campuses, which shows a shakeout may be already be in the works.

1 CORRECTION, 2:45PM: Caen Contee is the head of marketing and partnerships for LimeBike. An earlier version of this article misidentified him as Jack Song.

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Chinese bike-sharing companies got a head start in the US, but American startups are battling back.